Just an Online Minute... Spin Off or Shut Down?
Yesterday, a company spokesman said that the company has no spin off plans, despite a report that Steve Case is in favor of busting up the blockbuster merger that he himself brought about.
Forgetting for a moment the fact that Case has resigned as AOL chairman and now carries relatively little weight with the company, I'd like to know what exactly he was thinking by floating the idea of depriving AOL of the big Time Warner umbrella that has kept it afloat all these months.
Here are the facts. Last month the company said the AOL division expects ad revenues to decline 35% to 45% from $1.3 billion this year. Just recently, company CFO Wayne Pace said that AOL is seeing demand for its dial-up service slip faster than the company had expected.
Nevertheless, the company's PR machine maintains that the December "turnaround plan" is still on track and AOL TW CEO Richard Parsons promises that the online unit is going to sell more ads this year compared to last year.
First of all, as I've asked before, if they're losing members, how are they going to sell more ads? Second, the company's broadband business - the centerpiece of the turnaround plan - isn't breaking any records. And third, the whole of AOL TW expects 2003 revenues to remain flat at $9.1 billion for the year.
Many are predicting that if the turnaround plan doesn't work (and I'm betting it won't), AOL TW will indeed let the online division loose. However, and this brings me back to my original point, in the interest of calling a spade a spade, it won't be a spin-off. It will be a shutdown. A death sentence. AOL won't survive on its own. Stop the spin-off talk and come up with a turnaround plan that actually works.